Did Powell Just End The Bear Market?



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In this video, I discuss yesterday's FOMC decision, and its implications for Fed Funds, the Fed's balance sheet roll-off, as well as for risk assets like stocks and Bitcoin.

I believe that political pressure to bring inflation down before the mid-term elections currently supersedes worries about tanking the stock market.

Stocks rallied yesterday as Powell telegraphed that they would be avoiding 75 bps hikes, and that the pace of balance sheet shrinkage would be about half what the market had been pricing in.

Nevertheless, I still think that we are going to see a volatile summer, with stocks and Bitcoin headed much lower before the Fed is forced to reverse course and turn the money printers back on.

Not investment advice! Consult a financial advisor.

Stocks rally on Fed decision:
https://www.bloomberg.com/news/articles/2022-05-03/stocks-set-for-steady-open-as-next-fed-cue-awaited-markets-wrap

Fed Funds probabilities:
https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

Fed recap:
https://www.cnbc.com/2022/05/04/follow-the-latest-updates-as-the-federal-reserve-gets-set-to-hike-rates.html

US debt clock:
https://www.usdebtclock.org/

FOMC statement:
https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504a.htm

Powell press conference remarks:
https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220504.pdf

Inflation and political pressure on the Fed:
https://www.brookings.edu/blog/fixgov/2022/02/17/why-inflation-is-president-bidens-biggest-political-problem/

Fed balance sheet:
https://fred.stlouisfed.org/series/WALCL

Michael Burry on bear market rallies:
https://twitter.com/michaeljburry/status/1522003443916943362

Gold's volatile rise in Weimar Republic:
https://www.myrmikan.com/pub/Myrmikan_Research_2019_05_10.pdf

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#Fed
#Stocks
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